National Futures Association (NFA) – USA

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    NFAThe National Futures Association, commonly abbreviated to the NFA, is an independent financial regulator tasked with safeguarding the US futures and commodities market.

    Responsibilities and powers

    The primary goal of the NFA is to ensure that all trading is carried out fairly and that investors are protected. In order to achieve this, the NFA imposes a number of rules and regulations on its members and carries out constant checks to ensure that these are enacted by industry participants.

    Among its responsibilities are policing fraud, providing mediation and arbitration for resolving disputes and consumer complaints and carrying out discipline procedures if rules are abused.

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    If a rule violation takes place, sanctions can range from a warning letter to a formal complaint, which could warrant prosecution. The Business Conduct Committee (a board composed of nine NFA board members, three of whom must have no association with any NFA member) decides on the severity of the punishment.

    Penalties include expulsion from the futures market, suspension for a fixed period, prohibition from future association with any NFA Member and fines of up to $250,000 per violation.

    Membership

    Membership to the NFA is mandatory for any individual or entity wishing to conduct business on the US futures exchange. This ruling is designed to help protect investors and to ensure that there is a level playing field for companies.

    Membership fees paid by members and assessment fees paid by users of the futures markets are used to cover the running cost of the NFA, with no costs at all shared by the US tax payer.

    Origins

    The NFA began operating in 1982, following the establishment of the Commodity Futures Trading Commission in 1974. This was the same legislation which permitted the creation of registered futures exchanges and was therefore swiftly followed by the development of the regulatory organisation tasked with policing the new exchange system.

    The NFA is headquartered in Chicago and also maintains an office in New York.

    For further information, see the NFA website.

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